Nifty at new high again! B&K sees another 10% upside in 12 months, suggests this strategy
Nifty50 has been on a bull run, hitting record high for the fourth straight session on the back of stellar GDP growth in the September quarter, foreign investors inflows returning to Indian equities, stabalising dollar and yields, and hopes of a rate cut sooner than anticipated. Moreover, state election results indicating a very high probability of policy continuity also aided the sentiment. Indian markets also saw a strong rally in November, rising 5.5 percent after a weak October following strong global cues as the risk of worst-case scenarios reduced both internationally and in India.
This rally is set to continue in India, believes brokerage house B&K Securities. As per the brokerage, the valuations are higher than long-term averages based on Earnings and Book Value. The Yield Gap measure that we use to arrive at our Index fair value has also moved higher than average.
However, given the reduction of risks including Policy risk, the Valuations could remain higher for longer, it forecasts. Geopolitical threat and Interest Rate risk turn neutral in November: The Israel-Hamas conflict continues but has receded in intensity and this along with higher US crude inventories and lower demand scenario led to crude prices cooling off. Another global risk emanating from the spike in bond yields also subsided in November with US treasury benchmark yield softening from 5 percent to 4.4 percent, said the brokerage.
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